IRA & Education Savings Account Support

Yes! A non-deductible contribution gets you one step closer to a secure retirement. It grows tax-deferred and is tax-sheltered until you withdraw it.

You should file a 8606 form to track your non-deductible contributions.

You may receive a non-refundable tax credit (not to exceed $1,000) for contributions made to Traditional and Roth IRAs. If you are eligible, the tax credit equals the applicable percentage on up to $2,000 of a "qualified retirement savings contribution" which includes annual Traditional and Roth IRA contributions. Eligibility requirements include:

• You need to turn 18 years before the end of the taxable year
• You can't be a dependent or a full-time student
• You need to have adjusted gross income (AGI) within limits

See the chart below for eligible income levels and the applicable percentage used to calculate the tax credit:

Contributions

Joint Return		Head of Household		All Other Cases		Applicable percentage
Over	Not over	Over	Not over	Over	Not over
$0	$37,000	$0	$27,750	$0	$18,500	50%
$37001	$40,000	$27,751	$30,000	$18,501	$20,000	20%
$40,001	$62,000	$30,001	$46,500	$20,001	$31,000	10%
$62,000		$46,500		$31,000		0%

Please consult a tax professional

You can contribute:

• If you have earned income from employment equal to or greater than your IRA contribution

Contribution Limits

Year	Amount	Catch-up Amount (ages 50+)
2017 and 2018	$5,500	$1,000
2019 and 2020	$6,000	$1,000*

*For a total combined contribution amount of $7,000

Unlike most employer retirement plans in which access to funds is limited to such events as change of employment, plan termination, reaching retirement age, death, or disability, access to your IRA funds is guaranteed, always. However, until age 59 1/2 there is a 10 percent early distribution penalty and you may be taxed on the amount withdrawn unless you qualify for an exemption due to one of the following reasons:

• Disability
• Qualifying medical expenses
• Qualifying education expenses
• Unemployment (under certain conditions)
• Qualifying first home purchase
• Death
• Receipt of your IRA assets in equal payments over your life expectancy
• Distribution on account of an IRS Levy
• Qualified HSA funding distribution
• A qualified military reservist called to active duty for at least 180 days (applies to individuals ordered or called to active duty after 9/11/01 and before 12/31/07)

You can move your IRA from one financial organization to another provided that your IRA assets are:

• Withdrawn (distributed) and redeposited elsewhere (known as a rollover) within 60 days
• Moved to another organization (known as a trustee-to-trustee transfer)

Note: The IRS permits one rollover deposit in a 12-month period for all IRA accounts. This limitation doesn't apply to Roth conversions or institution transfers.

Unlike the Traditional IRA, there are no required minimum distributions at age 70 1/2. Your earnings can continue to grow until you need them. There are special requirements when these plans pass to your beneficiaries.

Yes. You may convert assets from a Traditional IRA to a Roth IRA. You must pay tax on any previously untaxed dollars converted from the Traditional IRA to the Roth IRA, but the 10 percent early distribution penalty doesn't apply to the conversion amount. You should seek advice from a tax professional to determine whether converting pretax retirement assets is beneficial.

Almost anyone can contribute. There are two key limitations:

• Each child can receive a total of the maximum allowed per year in contributions from all sources. It does not make a difference if this is done in a single account or multiple accounts designed to benefit the same child.
• Individuals may be limited in the amount of their contributions if their modified adjusted gross income (MAGI) exceeds $95,000 for single filers or $190,000 for married tax filers. Above these income levels, the ability to contribute is phased out. If income exceeds $110,000 for single tax filers, or $220,000 for married tax filers, no contribution is allowed. Effective January 1, 2002, married individuals (filing a joint return) may make the maximum $2,000 contribution per designated beneficiary when their joint MAGI is $190,000 or less. The $2,000 limit is reduced and gradually phased out for joint filers when their combined MAGI is between $190,000 and $220,000. When their combined MAGI is $220,000 or more, married individuals filing joint returns may not fund a Coverdell ESA.

Contributors don't have to be family members. Corporations and other entities (including tax-exempt organizations) can also make contributions to Coverdell ESAs, regardless of the income of the corporation or entity during the year of the contribution.

With this broad range of potential contributors, it's possible that more than one person may want to contribute for the same child. A coordinated effort should be encouraged to avoid excess contributions.

You can roll over funds from one Coverdell Education Savings Account (ESA) to a new or existing ESA. The funds, however, must benefit the same child or an eligible member of the child's family. A rollover contribution doesn't affect the annual contribution limit. Rollovers must be completed within 60 days of the initial distribution and are limited to one per 12-month period.

You can change the designated beneficiary. For example, if the current beneficiary has finished school and there are funds remaining, a sibling can become the beneficiary. New beneficiaries must be an eligible family member:

• Children, grandchildren, and stepchildren
• Brothers, sisters, stepbrothers, and stepsisters
• Nephews and nieces
• Parents, stepparents, and grandparents
• Uncles and aunts
• Spouses of all the family members listed above

Even with this extended range of family members, contributions only can be made for those younger than 18 years old.